Resolve is announcing today that Japan-based Takeda Pharmaceuticals has agreed to form a partnership to co-develop Resolve’s lead drug candidate for autoimmune diseases. Under the deal, Takeda has gotten the exclusive option to license Resolve’s lead drug candidate, RSLV-132, and all of its other molecules in development once the lead drug has finished an early-to-mid stage clinical trial in lupus patients. The deal calls for Resolve to get $8 million this year to fund the early development it needs to get it to that judgment day expected in late 2014 or early 2015.

Takeda isn’t disclosing how much it will pay Resolve if it chooses to exercise its option then, but Takeda has agreed to pay Resolve shareholders as much as $247 million over time when rolling together the exercise fee and two development milestones, says Resolve co-founder and CEO Jim Posada. The exercise fee alone is enough to provide a five-fold return on investment for Resolve’s shareholders, and if RSLV-132 hits all its goals, it could provide a 10-fold to 15-fold return on investment, Posada says, plus ongoing royalties on sales of the Takeda drug. If Takeda exercises its license option, Resolve will end up among the top 1-5 percent of life science venture returns, partly because of the small amount of investment it required, he says.

Jim Posada, CEO of Resolve Therapeutics

If Takeda declines its option, Resolve will be free to license the drug to another company.

“This is a great deal for the investors,” Posada says. “The real story is we were able to go from a concept in a research lab at UW, to a lead molecule in manufacturing with a data package suitable for a large pharmaceutical company to make a significant investment, after a little more than two years and $3 million of investor money.”

To be clear, Posada says the company has only used $3 million of investor money to clinch this partnership, but it has more than that in the bank. The company has raised a total of $7.8 million in a pair of financings, including its most recent round in November. New Science Ventures and Easton Capital backed the company in both financings, and Seattle-based WRF Capital joined the most recent round.

Resolve was founded in 2010, based on a concept from rheumatologist Keith Elkon and immunologist Jeff Ledbetter. They worked with Posada, a former Eli Lilly dealmaker, to craft … Next Page »